Last week, I wrote a piece about how most Canadian universities seem to have come through the pandemic financially unscathed or even a little bit better off.  Briefly, universities pulled back on the spending in expectation of a collapse in revenues and then the collapse never really happened.  Result: higher surpluses.

Let’s just say the reactions to this piece were…heartfelt.   And they often involved some combination of the adjective “lying”, and the nouns “tightwad”, “bastard” and “admins”.  To the extent that there were variations on a theme, it was split between people asking why more money wasn’t spent last year to help deal with the challenges of teaching in a pandemic and those saying, “remember this come bargaining time”.

While I get the sentiment, I don’t have a lot of sympathy with these views, for reasons I will outline.  But I do think in general Canadian universities and colleges are heading into some very tricky territory and it is worthwhile to think a bit more carefully about how institutions steer their way through the financial shoals of the next few years. 

Let’s start by thinking through some of the accusatory stuff.  First, did universities act with malice aforethought in generating big surpluses last year?  No, don’t be ridiculous.  Pulling back on spending was absolutely the right thing to do at the start of the 2020-21 fiscal year: and given how catastrophic the initial views about how damaging an online semester would be to students, arguably most universities were too lax in restraint.  Many were budgeting for significant deficits in the hope that they could make it up later, or, if things were bad enough, they’d get a bailout.  It wasn’t really until late fall, more than halfway through the year, that people started to realise it wasn’t going to be so bad. 

The question then is: could more money have been released in late fall to help professors and Deans make second term easier?  Hired more staff (either academic or academic support), facilitated more training, etc?  And the answer is: maybe.  I think the two things that could have helped the most, hiring more developers and doing more training in online teaching, would likely have been beset with bottleneck issues regardless of the amount of cash thrown at them – that is, people doing those things were in such high demand at the time that it would have been difficult to hire/book them before mid-January (after which time they probably would not have made much of a difference for the second term).  To be clear: I am not saying universities could not have done more, I am saying we should be skeptical of claims that they could have done much more.

As for the second sentiment – “let’s get them back at the bargaining table” – it’s absurd with regard to tenured professors.  There are a litany of problems in Canadian higher education, but pay scales for unionized tenured faculty is definitely not one of them.  This data is a few years old, but there’s no reason to think it is not true now: we’re competitive with most but not all American universities on salary for most staff though probably not for the very top researchers.  And North American universities generally look compared to European ones, so the fact is we aren’t lagging in international league tables where pay is concerned.  

Another point I think I should throw in here is that surpluses are not, in and of themselves, signs of administrative miserliness.  In an age where governments are no longer providing regular grants for capital, and where revenues are less predictable because they are more likely to come from students than governments, a 5% surplus is not just defensible but arguably necessary.  Of the 30-odd institutions I listed last week, half of those in surplus had surpluses which were below this threshold.  These institutions are not rich hoarders, they are (for the most part) just trying to hang on.

The bigger problem, I think, is in institutions which year after year post surpluses equal to 8 or 10 or 12% or more.  It’s not a majority of institutions, but enough that it’s an issue.  Because these institutions are piling up money and often don’t really seem to have any plan for what to do with it other than to keep stockpiling (or, in a couple of cases, putting up new buildings every time the surplus gets large enough to be a potential political liability).  What we are lacking in most Canadian institutions is a good process for collectively talking about preferences in carrying out the academic exercise and subsequently funding them.  By which I mean a) faculty are largely in the dark about institutional finances and the trends that affect them, and b) university admins are largely in the dark about any kind of faculty spending preferences other than those related to salaries.

Let me take what I think is probably the most burning issue at those successful institutions: namely, staff levels.  I think it is clear right now that despite both rising total revenues and rising enrolment in STEM programs, there are a lot of universities that are simply not hiring faculty in these areas.  We can get into all sorts of stuff about whether it is wise to hire more people given the difficulty in downsizing the areas where demand is falling, but the real difficulty I think is that university administrations fundamentally don’t believe that the big financial gains of the last decade or so from international students are durable.  Instead, I think it’s clear that they think this money could disappear at any time, and they are therefore loath to making 30-year salary commitments (which is what tenure implies) based on what could be a 10-year phenomenon.  And yet, at the same time, there are clear pressing needs emerging. So how do you balance these tensions?

At a healthy institution, you’d have ways of communicating not just funding sources, but risks associated with those funding sources.  And there would be ways of elaborating and prioritizing funds for short-, medium and long-term priorities, as well as ways of acknowledging trade-offs between these things.  But with maybe one or two exceptions, I don’t see anyone really trying to do this in Canada.  In fact, I suspect that at most universities the only time faculty think they have the administration’s attention on fiscal matters is during labour negotiations (hence the “let’s get them back come bargaining time” sentiment), but of course unions aren’t actually in a position to negotiate on financial issues apart from salaries, so most of the “big issues” are never on the table.

It doesn’t have to be this way.  Institutions could provide much clearer dash-board information on sources of income and sources of expenditure (and they could definitely be more user-centred in the way they display that data, presenting it in ways that make intuitive sense to staff rather than broad accounting categories).  They could hold regular (quarterly?) joint senate-board meetings a few times a year both to go over the newest numbers but also to talk about outlooks, risks and priorities: the current dominant practice of pretending that the two need to always sit apart from each other in air-tight boxes with only the President and one or two VPs as go-betweens is arguably a major part of the communication problem here.

(In fact – small aside here –  I wonder if in fact the University of Toronto decision to maintain a single Governing Council rather than a separate Board and Senate is in fact a source of long-term competitive advantage?  Something for a grad student to parse, perhaps) In sum: modest surpluses are desirable, consistent surpluses can be a problem, and institutions need better ways of collectively deciding on financial priorities.